Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Statistics and Probability Expert

describe what would be the utility values for the amounts given based on the indifference probabilities?

Chez Paul is contemplating moreover opening another restaurant or expanding its existing location.  The payoff table for these two decisions is

 

s1

s2

s3

New Restaurant

-$80K

$20K

$160K

Expand

-$40K

$20K

$100K

Paul has computed the indifference probability for the lottery having a payoff of $160K with probability p and -$80K with probability (1-p) as follows-

 Amount 

Indifference Probability (p)

 -$40K

0.4

  $20K

0.7

$100K  

0.9

a. Is Paul a risk avoider and a risk taker or risk neutral? describe.

b. Presume Paul has defined the utility of -$80K to be 0 and the utility of $160K to be 80.  describe what would be the utility values for  -$40K, $20K, and $100K based on the indifference probabilities?

c. Supposing P(s1) = .4, P(s2) = .3, and P(s3) = .3.  Which decision must Paul make using the expected utility approach? 

d. Relate the result in part c with the decision using the expected value approach.

Statistics and Probability, Statistics

  • Category:- Statistics and Probability
  • Reference No.:- M922123

Have any Question? 


Related Questions in Statistics and Probability

1 in an experiment with two independent variables an anova

1. In an experiment with two independent variables, an ANOVA partitions the total variance into four components. What are they? 2. MS wg  appears in the denominator of every F-test. Why?

A student wonders if people of similar heights tend to date

A student wonders if people of similar heights tend to date each other. She measures herself, her roommate, and the women in adjoining rooms; then she measures the next man each woman dates. Here are the data (heights in ...

A company has 1000000 to invest in new rampd projects the

A company has $1,000,000 to invest in new R&D projects. The company wants to determine what set of projects should be selected. [Deterministic Scenario] The following table summarizes the initial cost and revenue potenti ...

Statistics paperthe final paper provides you with an

STATISTICS Paper The Final Paper provides you with an opportunity to integrate and reflect on what you have learned during the class. The question to address is: "What have you learned about statistics?" In developing yo ...

The mixed methods approachthrough your work in this unit

The Mixed Methods Approach Through your work in this unit, you have come to understand just how different quantitative and qualitative decision-making techniques are. Perhaps that is why a mixed methods decision-making t ...

1 a study was conducted at a local college to analyze the

1. A study was conducted at a local college to analyze the average GPA of students graduated from Arizona State in 2012. 100 students graduated from Arizona in 2012 were randomly selected,and the average GPA for the grou ...

Just want to have a simple answer for this question how did

Just want to have a simple answer for this question: How did the Cold War shape decolonization?

What three criteria must be met to establish that one

What three criteria must be met to establish that one variable causes changes in behavior? Which of these criteria are met by quasi-experimental designs? Which of these criteria are not met, and why?

Case study mikhail gorbachevs 1988 un speechif the pace of

Case Study: Mikhail Gorbachev's 1988 UN SpeechIf the pace of improving US-Soviet relations seemed rapid, Mikhail Gorbachev's speech to the United Nations General Assembly would shift the process into overdrive.  In this ...

How do you interpret the p-values in a regression output

How do you interpret the p-values in a regression output? What does a p-value of .0495 mean? What significance level is this?

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

WalMart Identification of theory and critical discussion

Drawing on the prescribed text and/or relevant academic literature, produce a paper which discusses the nature of group

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro